Insurance Agent Forum

[Melmunch3]

I have a client that has health insurance with us. They have an employee who is married. The employee was covered with their health insurance, as was his wife. The employee got a legal separation a while ago. Although legal seperation is a qualifying even thus making his wife eligible for COBRA, he decided to continue paying for her coverage anyway. As such, she was not eligible for COBRA, since she was not terminated from the plan.

Several months later, at open enrollment, the employee dropped his wife from his coverage without telling her. She did not realize this for several months and just now found out about it.

She is claiming that she should be eligible for COBRA since her coverage was "terminated". The insurance company feels that since her coverage was voluntarily surrendered by the husband, there is no COBRA entitlement. The questions are:
Does an employee voluntarily removing a spouse from coverage entitle the spouse to COBRA?

Is there some law that you cannot remove your wife from your policy without her consent?

[moonlightandmargaritas]

Originally Posted by Melmunch3

She is claiming that she should be eligible for COBRA since her coverage was "terminated". The insurance company feels that since her coverage was voluntarily surrendered by the husband, there is no COBRA entitlement. The questions are:
Does an employee voluntarily removing a spouse from coverage entitle the spouse to COBRA?

Is there some law that you cannot remove your wife from your policy without her consent?

It's all stautory Sam, depending on the state.

Here in Florida, she is NOT considered "terminated", but voluntarily surrendered. As the employee, he has the power to do that. That's the chance she takes in a game of chance.

Don't know of any law here that say you cannot remove her.

[djs]

Interesting question, I have no real idea, though I think the carrier is right. Cobra qualification requires a qualifying event. Simply dropping the plan is not a qualifying event, but the marital separation was.

Why would she want Cobra? Why not just get coverage on her own? Okay, I assume there is something more to the story that I don't need to know about......

Dan

[djs]

Originally Posted by moonlightandmargaritas

Don't know of any law here that say you cannot remove her.

Not a law, but it depends what the separation agreement says. He might be on the hook to cover her medical insurance.

[Melmunch3]

The client is actually in Florida, so that does help.

Their attorney mentioned that terminating coverage after a legal separation could be considered a unilateral change in something or other and could be in violation of the separation terms. If that is the case, then the employee might have liability for her bills if she does not qualify for individual coverage (Which she won't)

[Melmunch3]

According to one of the guides on Commerce Clearinghouse:

Causation

"A qualifying event will not occur upon a loss of coverage under a group health plan unless the loss of coverage is linked directly to one of the events listed in COBRA"
This would mean that him dropping her is not a qualifying event.


"The issue of causation also may arise in the case of a divorce. For example, it may happen that an employee cancels his or her spouse's health coverage as of a date that is before the date that the divorce becomes final.156 In such a case, the spouse's loss of coverage is not due to a COBRA qualifying event (i.e., divorce). However, pursuant to the IRS's final COBRA regulations, the "anticipatory cutback" rule may apply, and, thus, the spouse may be entitled to prospective COBRA coverage. (See section 5.04[E].)"

5.04[E] says: Anticipatory Cutbacks

"The IRS takes the position that if an employer reduces or eliminates group health plan coverage in anticipation of one of the events listed in COBRA (a course of action referred to as an anticipatory cutback), the cutback in coverage will be disregarded, and the issue of whether a loss of coverage has occurred will be determined by examining the pre-cutback level of benefits."

Therefore, if he is planning on getting a divorce, and this was in anticipation of it, then she might still be eligible for COBRA.

[moonlightandmargaritas]

Originally Posted by djs

Not a law, but it depends what the separation agreement says. He might be on the hook to cover her medical insurance.

Here in Florida, there is no written "legal separation agreement". If the parties are living apart, they are deemed to be separated.

I have several clients who are family law attorneys who work in divorce court who have explained it to me (usually over beers) relative to "cheating by a spouse" which is fault grounds here in Florida (which is a no-fault divorce state with a couple exceptions).

Of course Sam, don't forget "IANAL".

[moonlightandmargaritas]

In these cases, state marital statutes trump the IRS definitions.

[LGilmore]

In WA when you drop a spouse, most carriers require a spouse signature. The EE is on the hook posibly depends on FL law. I can't see where the ER or insurance carrier is on the hook for the EE's actions. He may be, but that's after court.

[somarco]

Are they still separated or has the divorce become final? If so, was it final while she was still covered? When was she dropped from the plan (month & year). Is this a fully insured plan or self funded? Is the contract issued in FL or is that just where the wife (ex-wife) lives? How large is the group?